Alberta
Alberta Party announces ‘Children First’ childcare plan
Alberta Party Leader Stephen Mandel says an Alberta Party government would pursue an ambitious new plan for early learning and child care.
The ‘Children First’ plan includes expanded direct financial support to lower and middle income families to cover the costs of licensed day care and out-of-school care programs, a caregiver tax credit, and the creation of more affordable, high-quality child care spaces throughout the province.
Under the plan lower and middle-income families would receive financial support to cover the costs of licensed child care through a voucher program. Vouchers could be used for any licensed child care and will provide a subsidy of up to 100% of the costs of a child care cost (up to established regional maximums) and applies to all licensed child care spaces in the province.
The subsidy will be income-tested using a sliding scale calculation. For general reference, approximate out-of-pocket maximums (based on income) for child care under this plan are as follows:
Approximate Combined Family Income | Estimated Maximum Cost Per Day to Families Per Child |
$0 – $29,999 | $0 per day max |
$30,000 – $49,999 | $5 per day max |
$50,000 – $69,999 | $10 per day max |
$70,000 – $89,999 | $20 per day max |
$90,000 – $110,000 | $30 per day max |
It is expected parents attending post-secondary education and those earning minimum wage will receive a 100% subsidy of their child care costs.
Other details in the plan include:
- Caregiver tax credit- For families with children who do not use licensed child care or don’t use the voucher program, an income-tested caregiver tax credit would be created to help recognize the costs involved in raising children.
- Creating more licensed child care spaces- A review of Alberta’s child care legislation will be undertaken, with a view to making it easier to create more licensed, safe, affordable, high-quality child care spaces. Under the plan an investment credit would also be established to encourage employers to create licensed child care spaces for children of employees.
- Creation of a new Ministry of Early Childhood- A new ministry which would focus on early learning and early childhood in Alberta.
Alberta
Alberta government should eliminate corporate welfare to generate benefits for Albertans
From the Fraser Institute
By Spencer Gudewill and Tegan Hill
Last November, Premier Danielle Smith announced that her government will give up to $1.8 billion in subsidies to Dow Chemicals, which plans to expand a petrochemical project northeast of Edmonton. In other words, $1.8 billion in corporate welfare.
And this is just one example of corporate welfare paid for by Albertans.
According to a recent study published by the Fraser Institute, from 2007 to 2021, the latest year of available data, the Alberta government spent $31.0 billion (inflation-adjusted) on subsidies (a.k.a. corporate welfare) to select firms and businesses, purportedly to help Albertans. And this number excludes other forms of government handouts such as loan guarantees, direct investment and regulatory or tax privileges for particular firms and industries. So the total cost of corporate welfare in Alberta is likely much higher.
Why should Albertans care?
First off, there’s little evidence that corporate welfare generates widespread economic growth or jobs. In fact, evidence suggests the contrary—that subsidies result in a net loss to the economy by shifting resources to less productive sectors or locations (what economists call the “substitution effect”) and/or by keeping businesses alive that are otherwise economically unviable (i.e. “zombie companies”). This misallocation of resources leads to a less efficient, less productive and less prosperous Alberta.
And there are other costs to corporate welfare.
For example, between 2007 and 2019 (the latest year of pre-COVID data), every year on average the Alberta government spent 35 cents (out of every dollar of business income tax revenue it collected) on corporate welfare. Given that workers bear the burden of more than half of any business income tax indirectly through lower wages, if the government reduced business income taxes rather than spend money on corporate welfare, workers could benefit.
Moreover, Premier Smith failed in last month’s provincial budget to provide promised personal income tax relief and create a lower tax bracket for incomes below $60,000 to provide $760 in annual savings for Albertans (on average). But in 2019, after adjusting for inflation, the Alberta government spent $2.4 billion on corporate welfare—equivalent to $1,034 per tax filer. Clearly, instead of subsidizing select businesses, the Smith government could have kept its promise to lower personal income taxes.
Finally, there’s the Heritage Fund, which the Alberta government created almost 50 years ago to save a share of the province’s resource wealth for the future.
In her 2024 budget, Premier Smith earmarked $2.0 billion for the Heritage Fund this fiscal year—almost the exact amount spent on corporate welfare each year (on average) between 2007 and 2019. Put another way, the Alberta government could save twice as much in the Heritage Fund in 2024/25 if it ended corporate welfare, which would help Premier Smith keep her promise to build up the Heritage Fund to between $250 billion and $400 billion by 2050.
By eliminating corporate welfare, the Smith government can create fiscal room to reduce personal and business income taxes, or save more in the Heritage Fund. Any of these options will benefit Albertans far more than wasteful billion-dollar subsidies to favoured firms.
Authors:
Alberta
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